Union Budget 2026: Union Finance Minister Nirmala Sitharaman is set to present the Union Budget 2026-27 in the Lok Sabha today. Following the presentation in the Lower House, a copy of the Budget will be tabled in the Rajya Sabha. This will mark Sitharaman’s ninth consecutive Budget presentation since taking office in 2019 and the third Budget of the Modi government in its third term. While public discussion often focuses on areas like roads, railways, defense, or welfare schemes, analysing past budget figures reveals which sectors receive the largest allocations. Let’s take a look at the sector where the government allocates the highest expenditure.
Government’s biggest expenditure
According to the revised estimates for Budget 2024-25 and the Budget at a Glance 2025-26, interest payments constitute the largest component of total government expenditure. In 2024-25, interest payments accounted for approximately 24% of total expenditure. This figure is projected to increase slightly to around 25% in 2025-26. In simpler terms, roughly one-quarter of every rupee the government spends goes towards servicing past debt. This money does not contribute to creating new assets, jobs, or infrastructure.
Largest allocation by Ministry
Among all ministries, the Ministry of Defence receives the largest allocation. In the 2025-26 budget, the Ministry of Defence was allocated Rs 6.81 lakh crore. This is approximately 10% more than the previous year. This expenditure includes salaries, defence pensions, modernization, arms procurement, and operational preparedness.
Share of states
A significant portion of central expenditure goes directly to the states. The states’ share of central taxes and duties accounts for approximately 22% of the total expenditure. This amount is mandated by constitutional provisions and the recommendations of the Finance Commission to support state-level governance and development.
Infrastructure and transportation
Infrastructure remains a high-priority sector in every budget. The Ministry of Road Transport and Highways receives a substantial budget allocation for roads and highways. This allocation focuses on asset creation, logistics efficiency, and long-term economic growth. In 2024‑25 Budget, the Ministry of Road Transport and Highways (MoRTH) was allocated about Rs 2.78 lakh crore.
If we look at rural development sector, it received Rs 2.66 lakh crore in the previous budget. The aim was to generate employment in villages, and improve housing, sanitation, and basic infrastructure. Subsidies on food, fertilizers, and other essential items account for approximately 6% of total government expenditure, while pensions for government employees constitute about 4% of the budget. Previous budget figures clearly show that interest payments dominate government spending, exceeding even defense and infrastructure expenditures. This highlights the importance of fiscal discipline, controlled borrowing, and sustained economic growth.
